Money has been coming out of the largest gold-backed ETF in the world SPDR Gold Shares every week since November 11. However iShares Gold Trust, a smaller rival favored by individuals investing small amounts for themselves, has seen constant weekly inflows.
Prior to settling on Tuesday at $1,185.50 per ounce on the Comex in New York, the futures contracts for Gold had risen as much as 0.5 percent. Ever since hitting a 10-month low on December 15, gold Prices have risen 5.4 percent. China is said to be ready to retaliate should trump take punitive measures against Chinese goods and start a trade war between the two biggest economies.
Concerns over Instability
According to former U.S. Treasury Secretary Lawrence Summers, investors are excessively optimistic about the risks of the Trump’s policies which could potentially be part of global instability unseen since the Second World War as said by analysts at Eurasia Group.
At the end of this year, analysts estimate that gold may rally to $1,300.
Potential for Reversal
Todd Rosenbluth, director of ETF research at independent research firm CFRA in New York said that “This is a shift from institutional investors that were using gold earlier in 2016, rotating out”. He also said that iShares Gold “is perhaps longer-term money that moved in and is more likely to stay a little bit longer.”
According data from the Bank of America Merrill Lynch, U.S. equities have seen inflows of $70 billion since November 8. Warnings sent out by Bank of America, Morgan Stanley and Goldman Sachs mention the potential for a reversal in the stock-market rally.